Taxation of pensioners living abroad
If you are a Finnish citizen and move abroad permanently, you remain subject to Finnish taxation for the year that you move and the three subsequent years. During this time you are taxed as though you were living in Finland, i.e. you have unlimited tax liability. You must apply for a tax card for pension income from the Finnish tax authority when your pension begins. If we have not received your tax card for pension income, we must withhold 40% tax on your pension. We will refund any overpaid tax as soon as we receive your tax card.
As of the beginning of the fourth year of living abroad, we will apply for a limited tax liability card for you, and you will pay tax to Finland only on the income you receive from Finland. For a foreign citizen, we will obtain a limited tax liability card immediately upon the start of the pension.
Pensions are usually taxed in Finland also following a move abroad
- According to Finnish legislation, Finnish pensions are taxed in Finland even when the pension recipient lives abroad.
- The pension of a person living abroad is taxed in the same way as that of a person living in Finland. The tax rate is determined by the pension recipient’s income.
- Finland has tax treaties with more than 70 states. Usually the tax treaties state that pensions paid by Finland are taxed in Finland.
A tax treaty can sometimes prevent the taxation of a pension in Finland
Finland has a special tax treaty with certain states (e.g. Spain, Portugal and France). According to the treaty, private sector pensions and national pensions are taxed only in the country in which the pensioner resides. State and local government pensions are generally taxed in Finland. Pensioners must apply for the application of the tax treaty with the Helsinki Area Tax Office. Further information concerning the taxation of pensioners who move abroad can be found on the Finnish Tax Administration’s website, www.vero.fi.
The new tax agreement between Finland and Spain will enter into force at the start of 2019. At the same time, the tax agreement between Finland and Portugal will end. After Spain’s new tax agreement enters into force, nearly all Finnish pensions paid to those living in Spain may be taxed in Finland.
Obtain a tax card if you return to Finland
If you move back to Finland, remember to obtain for a new tax card for pension income as soon as possible. You can request one from the Finnish Tax Administration online at www.vero.fi/taxcard, at the customer service number 029 497 050 (calls from outside Finland +358 29 497 050) or from the tax office. You must provide the tax authorities with information on all of your income during the current year.